How effective is your organization at leveraging data and analytics to power the business?

This is the question that we pose at the beginning of our client conversations. Gaining intimate insights about your customer, product, and operational behaviors, tendencies, trends and propensities is critical if organizations want to drive digital business transformation; optimizing key business processes, uncovering new monetization opportunities and creating a more compelling customer experience.

Unfortunately, organizations are struggling to leverage big data to drive their digital business transformation. They have fallen into the “Digital Business Transformation Chasm” where technology investments and proof of concept exercises are failing to yield the promised digital business transformation. These organizations have not adopted a customer-centric, business-driven “collaborative value creation” process for leveraging the data and analytics to achieve digital business transformation. Instead, they see Big Data (and the Cloud) as cost reduction vehicles (see Figure 1).

Figure 1: The Digital Business Transformation Chasm

Today, many digital business transformation mandates are being driven by IT, which tend to focus on what IT does best – cost reduction initiatives related to cloud, application modernization and infrastructure and architecture replacement.

However, to cross the digital business transformation chasm, organizations must change the dialog. Organizations need to embrace a comprehensive digital business transformation approach, led by Business leadership, that focuses on powering key business initiatives (that’s where the money lays) and providing a more compelling, more engaging customer experience (the source of long-term competitive differentiation).

Leading organizations are taking a different approach to crossing the digital business transformation chasm. These organizations have chartered the Line of Business (LOB) leadership to co-lead the initiative with IT as the key digital business transformation enabler. LOB leadership focuses on uncovering new monetization opportunities from market developments including the Internet of Things, digital applications that reach new customers and markets, new products and services enabled by data science, and the transformation from “connected” entities to “smart” entities (e.g., smart cities, airports, hospitals, schools, malls, cars, excavators). To support this digital business transformation, IT needs to focus on providing self-service data and analytics, enabling “fail fast / learn faster” analytics workspaces (sandboxes), analytics “at the edge” of the IoT network, and the data lake (see Figure 2).

Figure 2: Crossing the Digital Business Transformation Chasm

Organizations are figuring out how to exploit the economics of big data to harvest financial value of their data and resulting analytics (see blog “Determining the Economic Value of Data”). As new sources of data (internet of things, wearable computing, video tracking, extrasensory perception, embedded human, quantum sensors, bionic man) come on board, these organizations are mastering the ability to:

Quickly ingest these new data sources (structured, semi-structured, unstructured) into a common data and analytics environment (data lake)

Leveraging new platforms to deliver the analytic results to the “actuators” who act on the analytic results and recommendations (mobile platforms and augmented reality)

Creating methodology to help organizations to capture, refine and share data and analytics across multiple organizational use cases (Chief Data Officer Toolkit)

Re-tooling the organization to establish technical and cultural environment for collaborative value creation

This is the heart of the digital business model transformation!

Owning the Customer ExperienceOwning the customer experience is a key aspect of digital business transformation. In fact, it’s one of the most impactful first steps organizations can make toward digital business transformation; “Begin with an End in Mind” as Stephen Covey likes to say. Let’s review a couple of companies who are successfully leveraging data and analytics to transform their customers’ experience and drive digital business transformation.

BusinessWeek recently published an article titled “Will Amazon Kill FedEx?” BusinessWeek asks the question: Will Jeff Bezos and Amazon kill FedEx? This is the wrong assessment. Amazon isn’t after UPS or FedEx. UPS and FedEx do not need to worry. However, retailers such as Walmart, Target, Sports Authority, Best Buy and others need to worry because it’s not the overnight delivery business that Amazon wants to own, Amazon wants to leverage data and analytics to own the entire user experience. Amazon understands that the “last mile” from the distribution center into the hands of their customers is critical to delivering a more compelling and engaging customer experience (plus there are tons of insights to be gathered and mined in that last mile). Amazon seeks to “own the entire customer experience” including the satisfactory and timely delivery of the product.

Amazon has always had a fanatical focus on delivering a seamless and compelling user experience including easy website and mobile ordering, one-click pay, Prime two day (or even same day) delivery and is now even experimenting with drone deliveries (“Amazon to test drone delivery in the UK”).

Apple LessonApple is another example of a company who is fanatical about the customer experience. Apple employs a business model that seeks to vertically integrate all aspects of the user experience, gathering data and analytic insights into the customers’ usage of their products (as well as the millions of apps written to run on their products). Apple decided to control the manufacturing of their iPhones (and their IOS operating system) instead of opening up their environment to enable others to build IOS-based smartphones (like what Google did with their Android operating system). The results: while Google Android has larger market share (85.5%), “Apple is now inhaling 94 percent of global smartphone profits, selling just 14.5 percent of total volumes” (see Figure 3).

Figure 3: Apple Claims 94% of the Smartphone Industry’s Profits

I don’t know about you, but I think I’d prefer to have 94% of ALL the global smartphone profits instead of 83.5% of the market volumes, you know, just saying.

Dell EMC ExampleDell Technologies has also harnessed the power of data and analytics to drive digital business transformation. Earlier this year, EMC (prior to its acquisition by Dell) introduced MyService360TM, a personalized cloud-based services dashboard. MyService360 delivers a more transparent, more actionable experience to customers by coupling a wide variety of operational and customer service data sources with data science and advanced analytics to power a more engaging, more proactive customer experience (see Figure 4).

Figure 4: MyService360

The additional data and insights gained from engaging customers in these ways, further enables the digital business transformation efforts – creating the exponential effect shown in Figures 1 and 2. It is a true investment with on-going stream of business dividends.

Digital Business Transformation SummaryTo successfully cross the business transformation chasm, it requires that organizations host a different dialog. This dialog needs to be business-driven, LOB-owned/IT enabled focused on optimizing key business processes and uncovering new monetization opportunities.

One of the critical keys to this digital business transformation success is to own the entire user experience; to leverage data and analytics to gain superior product usage, customer behaviors, market dynamics and operational effectiveness insights to provide a more compelling, differentiated customer experience.

Bill Schmarzo, author of “Big Data: Understanding How Data Powers Big Business” and “Big Data MBA: Driving Business Strategies with Data Science”, is responsible for setting strategy and defining the Big Data service offerings for Hitachi Vantara as CTO, IoT and Analytics.

Previously, as a CTO within Dell EMC’s 2,000+ person consulting organization, he works with organizations to identify where and how to start their big data journeys. He’s written white papers, is an avid blogger and is a frequent speaker on the use of Big Data and data science to power an organization’s key business initiatives. He is a University of San Francisco School of Management (SOM) Executive Fellow where he teaches the “Big Data MBA” course. Bill also just completed a research paper on “Determining The Economic Value of Data”. Onalytica recently ranked Bill as #4 Big Data Influencer worldwide.

Bill has over three decades of experience in data warehousing, BI and analytics. Bill authored the Vision Workshop methodology that links an organization’s strategic business initiatives with their supporting data and analytic requirements. Bill serves on the City of San Jose’s Technology Innovation Board, and on the faculties of The Data Warehouse Institute and Strata.

Previously, Bill was vice president of Analytics at Yahoo where he was responsible for the development of Yahoo’s Advertiser and Website analytics products, including the delivery of “actionable insights” through a holistic user experience. Before that, Bill oversaw the Analytic Applications business unit at Business Objects, including the development, marketing and sales of their industry-defining analytic applications.

Bill holds a Masters Business Administration from University of Iowa and a Bachelor of Science degree in Mathematics, Computer Science and Business Administration from Coe College.